How Fair Are Contracts? Thoughts on the Authors Guild’s New Initiative

Elizabeth Bluemle -- July 29th, 2015

Illustration used with permission. © Eliza Wheeler

The book world – the commerce end of it, at any rate – has changed so much in the past 20 years, it’s almost unrecognizable. When we opened the Flying Pig in 1996, the big issue causing a stir among booksellers was something (long gone now) called “vendor of record.” Barnes & Noble was only just starting to be a big threat, putting indies out of business by the score. Now, nearly 20 years later, B&N has somehow come to seem like an underdog (!) in the shadow of that other online behemoth, and internet sales and e-readers have further morphed the face of the bookselling landscape.

Now authors are looking at their contracts in the face of these changes. The Authors Guild – the nation’s largest and most effective advocacy group for authors – has begun to address some of these issues through its Fair Contract Initiative (https://www.authorsguild.org/where-we-stand/fair-contracts/).

All of the issues outlined are worth reconsidering, and most of the proposed solutions make a lot of sense to me. The issue of rights – subsidiary rights, formatting rights, and copyright – all need revamping. Some are laughably skewed in the publishers’ favor. Others are harder to untangle.

I like the Authors Guild’s idea for subsidiary rights agreements to have an expiration date; like movie options, this would mean that if those rights are unexploited in x-amount of time (two years seems more than reasonable), then they would revert back to the author.

It’s also obvious that the concept of “out of print” has to be revisited.  How can that term still apply in an era where digital versions are always available, and even print copies can legally be considered always available because books can be printed on demand, one copy at a time?  Right now, publishers hold the rights to books for decades, long after they are essentially finished actively marketing and supporting a book. Sure, some books continue to sell for 35+ years – especially children’s books with a huge school and library market – but most don’t. 

People outside of publishing are astonished to discover that there’s a book purgatory called “OSI” (out of stock indefinitely). This is a state in which books are no longer being produced, warehoused, or shipped by publishers, but are still legally considered in print because of digital and print-on-demand availability. This is decidedly not in the spirit of the law as it was originally conceived. No author can make a living off sales from a few copies a year, and no author should be expected to rest content with that. So shouldn’t authors whose book sales have trickled down to next to nothing be able to get their rights back and – using the avenues now available to them for reaching a potential audience – pursue what is, after all, their livelihood?

In its post, “A Publishing Contract Should Not Last Forever,” the Authors Guild says:

That brings us to the third step: the “out of print” clause, which has failed woefully to keep up with modern publishing practices and must be replaced. The original concept was straightforward: When a publisher fails to keep a book on the market in a profitable way, the author should get all the rights back. This is more important today than ever, since e-books and print-on-demand make it easy for authors to republish their backlists: a recent study conducted by the British Authors’ Licensing and Collecting Society (ALCS) showed that 70% of authors who were able to reclaim their rights were able to earn more money from the work in question.

But publishers have cleverly managed to craft “out of print” clauses that make it almost impossible for authors to recapture their rights. Classic contract language states that a book is not out of print as long as it is “available for sale in any edition.” So publishers “release” the book in a print-on-demand or electronic edition that’s always available, even if few copies are actually sold. By relying on language originally intended to provide a real reversionary right, a publisher can now hold onto a book forever even if it’s not actually doing anything with it. That is not how “out of print” was supposed to work.

The remedy is simple: Kill the entire outmoded concept of “out of print.” Instead, the contract should define when book rights are being “inadequately exploited” and therefore available for reversion to the author when the book fails to generate a certain amount of income—say, $250–$500—in a one-year period. Using income as the yardstick, not a specific number of sales, is essential: Publishers might otherwise be able to game the clause by offering one-cent e-books the way they’ve gamed existing clauses by using e-books and print-on-demand.

But here’s where the solution gets tricky. The Authors Guild says:

We think the “standard” contract should last for a limited period of time from the date of publication; it should end well before the 35-year termination window opens. When the contract expires, if a book is still doing well, the author and publisher might negotiate another time-limited deal—or the author might choose to move the book to a house that has put more effort into marketing the author’s later works. If the book is no longer gaining support from the original publisher, the author might choose to self-publish it or take it to another publisher. In any case, a time-limited contract gives authors the leverage and flexibility that they need in today’s publishing environment.

I am alarmed to think of what the above could mean for smaller publishing houses who already face substantial financial challenges. I imagine a smaller house who has helped establish an author’s reputation and sales suddenly getting the rug pulled out from under its feet by a larger house that can wave around instant money and many promises (of uncertain fruitfulness) of better marketing.

Also, while the idea of a more competitive system has some appeal, publishing houses already struggle to keep up with current demands, and I feel this system might funnel publishers’ focus and efforts on bestseller marketing even more strongly than they are already.

I also think that it would be hard to fairly value the original publisher’s contribution to the work. Let’s say an author decided, after five or 10 years, that the original publisher wasn’t putting enough into the book, and both parties let the contract expire. Does the new publisher have the right to bring out the book in the same format, or would it need to be redesigned in some way? Regardless of a redesign, would the original publisher still be entitled to a small percentage of all future sales because, after all, it had taken the initial risk on that book, in good faith, for better or worse?

Copyright law and contracts need new boilerplates. There are many areas that tip the scales in an unbalanced way – usually at the expense of authors – and I am grateful to the Authors Guild for taking on the challenge.

What are your thoughts on possible solutions – especially with regard to copyright term limits?

6 thoughts on “How Fair Are Contracts? Thoughts on the Authors Guild’s New Initiative

  1. Dianna Winget

    One cent e-books? Wow, as if the publishing industry was not already intimidating enough. This makes me more appreciative than ever that I have a savvy agent looking out for my best interests. And I do not envy her job.

  2. James S.

    “When the book fails to generate a certain amount of income—say, $250–$500—in a one-year period. Using income as the yardstick, not a specific number of sales.”

    This is a good idea but publisher sales reporting to authors is already obtuse enough, this would just push things over into even more “creative accounting.” You see sales reports of $250.01 – $500.01 and other things used to just hold onto book rights. Or basing income on gross, not net. I could go on but you get the idea.

    1. Marion Gropen

      It’s true that royalty statements are hard to understand — that’s not usually intentional, but an accurate reflection of the insanely difficult task of putting together a system that will cover all the possibilities that agents and editors can create, and all the different types of sub rights and sales systems in all the different countries of the world, without a thought for the poor nerds in the back rooms who have to fit this stuff into an accounting system and a single universal reporting form.

      But publishers are highly unlikely to spend money (in fake royalties) to keep the rights to a book that isn’t selling. It actually costs them some money every year to keep the rights even when it’s in OSI status.

      Most publishers are happy with the idea that they revert rights on request when the royalties **earned** drop below $X per period for Y periods, as long as X and Y are reasonable numbers.

      For that matter, almost all publishers WILL revert rights in that situation, on request, no matter what the contract says.

      Most authors don’t bother to ask, before moaning and groaning about the terrible publishers and their horrendous rights grabs.

        1. Marion Gropen

          It’s pure frustration, not bashing. I’m sorry if it sounded that way.

          So many of the things that make authors deeply unhappy could be cured with a request or a question. Ever since I left my in-house work, and started working pro bono with authors and consulting to small publishers, I’ve seen so very much unnecessary unhappiness.

          1. Elizabeth Bluemle Post author

            Ah, I see. I think so many frustrations arise from ignorance — not even knowing the right question to ask, which feels so obvious once you are familiar with a field. Thanks for responding!

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